Saturday, March 01, 2008

Selling Futures in Future Stars

Read here about Indians' pitching prospect, Randy Newsom, who apparently tried to do just that.

Kiplinger Personal Finance, for which there currently is no link to the most recent issue, reported that while Newsom proposed an interesting investment to the public -- paying now for shares in his future income as a Major Leaguer should his career take off -- the Securities and Exchange Commission nixed it. Basically, you may not offer an investment to a broad group of people without going through the registration process. So Newsom's idea is either dead or on hold.

I'd submit that were this investment to be available, it would be a bad bet. It strikes me that 2/3 of the players signed are pitchers and that most fail, so you'd be better off buying an index fund or perhaps even putting your money on red at the roulette table at your nearest casino. But investing in a pitcher -- someone who makes his living deploying an unnatural motion? Don't quit your day job.